Fitch Thailand Assigns ‘A+(tha)’ to SCC’s New Debentures
Fitch Ratings (Thailand) Limited has today assigned a National Long-term rating of ‘A+(tha)’ with a Stable Outlook to Siam Cement Public Company Limited’s (SCC) upcoming senior unsecured and unsubordinated debentures No.2/2007, amounting up to THB10 billion, due 2011.
The new debentures will be used to refinance the company’s maturing debentures as well as to invest in its planned new projects.
The ratings are based on SCC’s good revenue diversification, its leading position and strong brand recognition in the domestic market, as well as its relatively strong cash flow generation and a moderate financial leverage target. The group’s debt serviceability and financial flexibility is further supported by its strong access to the local debt capital market. Nonetheless, SCC faces continued margin pressure due to rising energy costs, an impact from large excess supply and competitive operating environments in all its core businesses. SCC has earmarked THB88.1bn for its investment plans during 2007-10, mainly comprising its second naphtha cracker and downstream projects, a new investment in the packaging paper line in Vietnam, the new printing and writing plant in Thailand and an efficiency improvement programme for the cement division. In light of its large investment plans, SCC’s financial leverage is likely to increase, although the company should in general be able to maintain its net debt to EBITDAR ratio in line with the long term leverage target of 2.5x. Other key credit concerns also include the execution risks of these new investments.